Global Food Exchange

by Kimberly Field

Global Food Exchange shifts the dynamic in disaster preparedness by providing complete food and water relief with speed, kindness and positive returns for investors.

We have all watched heartbreaking television coverage of disasters occurring around the world. It seems that aid takes an agonizingly long time to arrive for victims. Many of us are moved to send donations to aid organizations, but Richard Lackey felt the need and saw the opportunity to do more. He combined his unique background and understanding of disaster recovery to create a new concept to deliver a complete relief solution—fast. "I worked my way through college as a paramedic and worked on emergency relief projects around the world for over 20 years," Lackey says. "We always had the same problems. People didn’t have clean water or adequate food in the immediate aftermath of a disaster. That caused tremendous problems later."

The Critical Window

The first 72 hours are critical in a disaster. It is imperative to get basic relief to survivors within this short timeframe; a task made immeasurably difficult when infrastructure has been wiped out by an earthquake or hurricane. In some cases, as in the developing world, infrastructure may not have existed in the first place. If people don’t get food and water within this timeframe, people die. "Morbidity rates go up dramatically," Lackey explains, his hands tracing the shape of a hockey stick to illustrate the sharp rise. "A lot of problems we see in the first weeks aren’t specifically related to the disaster, but to the problems of relief in the first week. Problems caused by contaminated water, insufficient nutrition or inappropriate foods and others." For instance, the traditional ready-to-eat rations distributed by the military contain very high sodium levels that populations in developing parts of the world may be unaccustomed to consuming. Their digestive systems can bind up; sometimes surgery is the only remedy.

The paradigm of aid shifted for Lackey when he learned about technology that could dehydrate and package foods and extend shelf life to as long as 20 years. With his background in emergency medicine and career experience in financial management, markets and trading, he envisioned a solution to a problem that had vexed relief organizations for decades. "What if we created a global system with pre-staged, standardized, commoditized products to give survivors appropriate menus, be it African, American, or Mediterranean, that provides well-rounded nutrition, along with water systems for purification and shelter systems? I couldn’t believe this did not exist," he exclaims.

Lackey began testing the concept for Global Food Exchange (GFE) in 2010, and in 2013 the Littleton-based company introduced its relief vaults containing an end-to-end solution for rapid response. The Food Relief Vault is a 58,500 meal, fully-sufficient system with cooking, preparation and sanitation supplies, emergency lighting, fuel and basic shelter materials in a 40-foot standardized ISO shipping container that is readily deployable and optimized for high-stress disaster relief situations. The vaults can be delivered via rail, ship, truck and airplanes. GFE also provides a Water Relief Vault that provides 100,000 gallon per day industrial reverse-osmosis system as well as a Shelter Relief Vault consisting of a FEMA and military-approved ergonomically-designed shelter systems. The vaults can be up and running in a relief operation in as little as ninety minutes.

Overcoming Challenges of Disaster Relief

Non-governmental organizations (NGOs) such as the Red Cross, World Vision and Catholic Charities are on the front lines of disaster relief, and know all too well the frustrations of their work. "For over 25 years I’ve been wrestling with issues surrounding relief, and I’ve not been satisfied with the answers," says Christopher Pitt, former senior vice president for organizational effectiveness at World Vision International. "When I met Richard and understood the GFE concept, I saw that this was a truly good approach. GFE applies advanced thinking around supply chain management and implementation. It is an end-to-end process that is ready to go and can be in theatre quickly." Pitt was motivated to join the GFE Board of Managers, a veritable who’s who of disaster recovery that includes executives with experience at ProLogis and CH2M Hill.

Pitt explains that NGOs, governments, FEMA and the even the World Food Program of the United Nations have limited food and relief stocks waiting in warehouses around the world ready to be sent to those in need. It takes time to assemble and deploy resources to affected areas. Even then, the supplies might not provide any balance in nutrition; it may be simply large supplies of rice or food products that aren’t easily digested by the people affected. The challenge for NGOs is assembling and delivering the right mix of resources quickly.

NGOs do not have funds lying around waiting either. "Donors want the money they donate to be used quickly for programs they support," Pitt says, "but NGOs must allocate funds immediately to purchase relief supplies." These organizations rely on the generous outpouring of donations that fortunately and reliably follows disasters to backfill their coffers. "It is a constant struggle for NGOs, which typically are risk averse."

Impact Investing

Disaster relief—the supplies, logistics, transportation—is expensive. Part of the GFE solution lies in innovative financial models that recognize that many investors today want to make an impact on the world. GFE’s global ambassador Jonathan Thomas explains: "Today’s impact investors expect their capital to result in a dual-core objective of real social and financial return." GFE gives investors the opportunity to access the long-term benefit of food as an asset class, while providing the capital needed to build a dynamic and sustainable relief resource network.

The organization employs a capital market model that provides immediately deliverable and affordable emergency relief supplies, while offering investors the potential for safe, respectable returns. GFE acts as a manufacturer of the relief vaults. The vaults are purchased through the exchange by a network of distributors, including benevolently-minded investment funds. The vaults are stored in strategic locations around the world. When disaster strikes, the vaults are immediately available through the exchange to governments and relief organizations that have created a relationship with GFE. GFE then deploys the vaults and bills the customer. Because there is typically a letter of credit in place, the fund investors are not exposed to credit risk.

"Paying for supplies in advance to have them sitting there on the off chance that they will be used at some point is not attractive for government entities or relief organizations," Lackey says. "Supplies may be sitting in one state and not used for years, while other areas are in need. Planning and management can be coordinated, but resources are more easily managed on a global scale." Lackey asserts, and feedback that GFE has received from FEMA, Catholic Charities and other entities suggests, that a better solution is for an independent organization like GFE to maintain resources regionally. "We know that disasters will occur somewhere in the area. We will use the resources and they won’t go to waste because they’ll be used long before they can reach their expiration dates. Governments or NGOs won’t have to pay for it until they need it."

"The GFE concept is similar to a squirrel storing nuts for the winter," Lackey says. "We buy food in advance and at the best times in the market, so we’re not buying after a disaster has occurred when food prices spike. Because we’re dehydrating food, we can make use of food that might otherwise have gone to waste because it was too ripe to ship to distant markets. Governments and NGOs can buy food relief vaults on the exchange at a lower margin than they might after a disaster happens, and the investor makes a reasonable return." The financial models GFE offers NGOs are attractive for a number of reasons, according to Pitt. "GFE gives relief organizations a way to plan and know that they have a complete disaster relief solution available quickly. And we are working with NGOs to develop additional donor funding streams for the organizations to bring new donors into their programs."

Forward Supply

This year GFE plans to stage relief vaults in areas close to (but not actually in) disaster-prone areas around the world. The secure staging facilities have easy access to rail, sea and air transport. "We are building. As money comes into the funds we are able to build more vaults and create more forward supply bases," Lackey says. "By the end of the year, we expect to have proof of concept and a footprint in the Middle East and Latin America, and by 2015 we look to be in Africa as well."

Preparedness is the new watchword in disaster management. Catholic Charities is among the groups considering the GFE solution. "Catholic Charities is working with GFE now to understand how to scale the relief vault solution regionally," says Larry Smith, CEO of Catholic Charities for the Denver Archdiocese. "Our mission involves serving with the love, mercy and compassion. GFE shares that mission and does not lose sight of the humanity of those in need. For example, the vaults include soccer balls, which is a simple thing that calms children and shows kindness and love. Respect for the human dignity of those affected by a disaster is important."

In tandem with Global Food Exchange, the international community has the ability to create a sustainable global relief resource network, allowing critical resources to be in place, ready to save lives today and for generations to come.

Radical Response: Free Market Solutions to Global Crises is a new book written by Richard Lackey. Find more information at the Global Food Exchange website, below.